25 February 2014
4QCY13 Results Update | Sector:
Equity Shares (m)
M.Cap. (INR b) / (USD
52-Week Range (INR) 2,940/2,225
1, 6, 12 Rel. Per (%)
Financials & Valuation (INR Million)
2013 2014E 2015E
17,065 19,448 22,165
Sanofi India's 4QCY13 result was above estimates with revenue growing 15% YoY
to INR4.6b (v/s est. INR4.7b), EBITDA growing 71% YoY to INR867m (v/s est.
INR684m) and reported PAT growing 107% YoY to INR928m (v/s est. INR566m).
However, the company reported exceptional income of INR254m from sales of
certain non-trade investments, adjusted for which PAT stood at INR674m.
EBITDA margins expanded by 610bps YoY to 18.8% (v/s our est. 14.7%) on a low
base of 4QCY12. Management has attributed this to stronger than expected
performance in export business.
PAT growth was boosted primarily by strong operational performance.
Valuation and view
SANL’s operational performance has witnessed a significant ramp up in 2HCY13.
We attribute this to (a) strong export led growth in CY13, (b) discontinuation of
loss making rural initiative Prayas (annual loss of INR300-320m) and (c) complete
reorganization in terms of advertising spend and field force of the acquired OTC
business of Universal Healthcare. In addition, only one key product from SANL’s
portfolio (Clexane) was impacted by the new DPCO.
We believe SANL is witnessing a phase of a change in margin profile led by a)
pricing benefit under new DPCO based on WPI and b) discontinuation of some
loss making projects which hurt margins in the past.
Post the 4QCY13 performance; we have upgraded our EPS estimates for
CY14E/15E by 8%/8%, mainly to reflect improving profitability of the business.
Based on our estimates, the stock is valued at 21x CY14E and 17.8x CY15E EPS.
with target price of INR2,965 (20x CY15E EPS).
(Alok.Dalal@MotilalOswal.com); +91 22 3982 5584
(Hardick.Bora@MotilalOswal.com); +91 22 3982 5423
Investors are advised to refer through disclosures made at the end of the Research Report.